MORNING CALL 3 JULY
2012
FLOWS;
BUYS: Maybank, Maxis, BAB
SELLS: MISC, Djacor, Sime
Technical Stock Alert;
KNM (RM0.71) - Its price has traded in a tight range
since late May around the 70 sen levels and is now forming a base at these
levels for a possible bounce. The company recently announced a cash call of 1:2
rights issue with 1 free detachable warrant. The rights price of RM1.00 is
payable via a first call of 40sen cash and 60sen via capitalization of its share
premium account. Proceeds of RM200m will be utilized to reduce the group's
borrowings of RM1.14bn. Its technicals are showing a clear positive divergence
and an immediate target of 76sen looks possible. A higher target of 90sen will
likely need a strong rerating catalyst such as announcement of financial
closure for its key projects, Peterborough (UK) and Octagon (Sri Lanka).
Trading BUY
GENTING (RM9.53) - drifting back down to attractive
accumulation levels. Its recent bounce back from a low of RM9.38 was derailed
by news of the group buying into Echo entertainment Group Ltd (Aust). It
currently holds 8.9% and is awaiting regulatory approvals to increase it above
10%. The stock remains one of the major under performers in KLCI, with a YTD
performance of -14% vs the KLCI average of +4.5%. We view the weakness as a
buying opportunity especially below the RM9.50 levels where the stock trades at
12x PE multiples. Short term target of RM9.80. Buy on weakness.
